EUR/USD Forecast: Cautious bulls retain control
|EUR/USD Current Price: 1.0735
- The US Consumer Price index rose at an annualized pace of 6% in February, as expected.
- Stocks welcomed US inflation figures, with Wall Street rallying ahead of the opening.
- EUR/USD holds on to weekly gains but still needs to clear a static Fibonacci resistance level.
The EUR/USD pair peaked at 1.0748 during Asian trading hours, retreating towards a daily low of 1.0678 early in the European session. The pair slowly recovered ahead of the release of the United States Consumer Price Index (CPI) as the upcoming Federal Reserve’s monetary policy decision came under scrutiny following the banking crisis triggered by SVB.
According to the US Bureau of Labor Statistics (BLS), inflation rose at an annualized pace of 6% in February, as expected, easing from the previous 6.4%. The core reading also matched expectations, up by 5.5% YoY. The Greenback remained on the back foot, but the decline was modest as Treasury yields soared. At the same time, stocks advanced, as the in-line-with-expectations reading could mean an easier pace of monetary tightening from the US Federal Reserve. After the dust settled, the US Dollar remained under selling pressure as Wall Street aims to open with substantial gains.
EUR/USD short-term technical outlook
The EUR/USD pair is battling with the 1.0745 level, the 61.8% retracement of the 2022 yearly slump. The pair has room to extend its advance according to the daily chart, as technical indicators remain within positive levels, although they are losing their bullish momentum. Still, the pair is developing above all its moving averages, with a flat 20 Simple Moving Average (SMA) providing dynamic support at around 1.0635.
The risk is skewed to the upside in the near term, and according to the 4-hour chart. A mildly bearish 200 SMA provides support around 1.0690, while the 20 SMA heads north almost vertically below it. Finally, technical indicators lack directional strength but hold near overbought levels. A clear advance through the aforementioned Fibonacci resistance is needed to confirm a new leg north towards the 1.0800 price zone.
Support levels: 1.0690 1.0635 1.0600
Resistance levels: 1.0790 1.0840 1.0885
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